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BP Business Economic Loss Claim Appeal 2017-797: Church’s “Revenue” and “Tax” Properly Classified By SP

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The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms


Claimant operates a church in Metairie, Louisiana, which the Settlement Program awarded $77,783.40 pre-RTP ($97,229 post-RTP). BP appeals alleging that the Settlement Program incorrectly classified two of Claimant’s expenses: First, Claimant’s “132-000 School Finan Support” appears to BP to reflect a donation made by the church to the associated school and should have been classified as Variable. Second, Claimant’s “140.00 Church Tax” account is not, according to BP, a “tax” (properly classified as Fixed under Exhibit 4D) but instead reflects a normal remittance of its collection to the diocese and should also have been classified as Variable.
As to the Settlement Program classifying Claimant’s “132-000 School Finan Support” account as “N/A,” BP points out that the Settlement Program’s calculation notes reflect that the Settlement Program had determined that this account reflected “transactions between the church and the related school.” Such donations of church funds to the school have, according to BP, consistently been treated as “Variable” contribution by the Settlement Program on a number of occasions. BP says that correctly classifying this account as variable decreases the award by $83,968 post RTP. According to BP, the second account at issue in this Appeal — “140.00 Church Tax”– was also misclassified as a Fixed “tax” expense by the Settlement Program.
While “tax” expenses are listed as fixed on Exhibit 4D to the Settlement Agreement, Claimant’s “church tax” expenses are not taxes in the typical sense. In the context of a church, a “church tax” means a remittance of a certain portion of the church’s collection to the diocese. Similar “church tax” accounts have consistently been treated as Variable expenses by the Settlement Program. BP contends that correctly classifying this account as Variable decreases the award by $21,056 post-RTP. BP requests a remand of this claim to the Settlement Program for further inquiry into the “School Financial Support” and “Church Tax” accounts. In the alternative, should the Appeal Panel find a remand is not appropriate, BP submits a Final Proposal of $0. Claimant counters that in this claim, School Financial Support is revenue received by and belonging to the Church but used for operational expenses of the School.
While citing unidentified claims as support, BP chooses to overlook that in this claim, the Program acted consistently to eliminate the effect of related party transactions in its calculation. The Program excluded revenue received from the School and categorized the Church expense for the School, School Financial Support, as N/A to accomplish that mandate. As to BP’s alleged error in the classification of “Church Tax” as a fixed expense, Claimant responds that again, BP cites other unidentified claims as support for its position that these fees should be categorized as Variable expenses in the calculation of the award to Claimant. However, unlike the other claimants to which BP infers, this expense for this Claimant is not a normal remittance of a certain portion of the Church’s collection to the diocese. For Claimant, the expense captured in this expense account is fixed assessments based on income for professional and administrative services for Claimant. As such, the Program correctly classified this expense as Fixed pursuant to Exhibit 4D.
Finally, in its Initial Proposal Memorandum, BP revealed its options of three different Final Proposal amounts premised on the success of any combination of its
appeal arguments. BP chose the Final Proposal amount of $0 and offers no substantiated professional calculation to support its $0 proposed amount. The Appeal Panelist must choose to award the Claimant either the Final Proposal by the Claimant or the Final Proposal by the BP, but no other amount. This is the Rule 17
“Baseball Process.” BP has provided nothing to this panelist which would evidence a finding that this claim is closer to zero ($0) which is BP’s Final Proposal than the amount as proposed by Claimant in its Final Proposal.
For all the foregoing reasons, this panelist selects Claimant’s Final Proposal, and BP’s appeal is denied.

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